LTC
LTC Properties Inc
Price:  
35.25 
USD
Volume:  
403,229.00
United States | Equity Real Estate Investment Trusts (REITs)
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LTC WACC - Weighted Average Cost of Capital

The WACC of LTC Properties Inc (LTC) is 6.3%.

The Cost of Equity of LTC Properties Inc (LTC) is 7.30%.
The Cost of Debt of LTC Properties Inc (LTC) is 5.40%.

Range Selected
Cost of equity 6.40% - 8.20% 7.30%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.70% - 6.10% 5.40%
WACC 5.5% - 7.1% 6.3%
WACC

LTC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.6
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 8.20%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.42 0.42
Cost of debt 4.70% 6.10%
After-tax WACC 5.5% 7.1%
Selected WACC 6.3%

LTC's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for LTC:

cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.